Wrong sanction under section 151 invalidates reopening notices and all assessment proceedings founded on them.

Sanction for reopening must be obtained under the correct clause of section 151 of the Income-tax Act, 1961; where approval is taken under the wrong clause, the reopening notice is invalid. On that basis, the notices and all consequential assessment proceedings were treated as unsustainable and could not survive.

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Issues: Whether notices and consequential assessment orders were liable to be quashed on the ground that the sanction for issue of the reopening notices was obtained under the wrong clause of section 151 of the Income-tax Act, 1961.

Analysis: The petitions related to multiple assessment years and the parties relied on the earlier ruling that, on the facts considered, sanction ought to have been obtained under section 151(ii) and not section 151(i) of the Income-tax Act, 1961. It was also noticed that the same reasoning had been applied in another connected decision. In that view, the impugned notices and the orders passed pursuant thereto were treated as unsustainable, and the consequential proceedings could not survive.

Conclusion: The notices and all consequential assessment and other orders were quashed and set aside in favour of the assessee.

Final Conclusion: The reopening action and all dependent proceedings were annulled, and the petitions were disposed of accordingly.

Ratio Decidendi: Where sanction for reopening is obtained under the wrong statutory clause, the resulting notice is invalid and any assessment order founded on such invalid notice cannot stand.

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